Cost Accounting

Published: 2021-09-04 17:30:08
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Category: Business

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[pic 1]In order to estimate product costs for valves, pumps, and flow controllers per unit, we need each product’s manufacturing overhead, plus material, total labor cost and machine depreciation. First of all, we calculate manufacturing overhead for each product line by assigning each category according to the weight. For example, in receiving department, valves have 3%, pumps have 19%, and flow controllers have 78%, so we use the total receiving cost of $20000 to come up to the receiving cost for each of the product, and we get $600, $3800, and $15600. We repeat this process in materials handling, engineering, packaging and shipping, and maintenance department for each product to get the total manufacturing overhead for each product line. Then we list material cost for each product according to monthly product and cost summary exhibit. Labor cost in Destin Brass Products Co. has been divided into two parts, set-up labor and run labor, both based on $16 per hour rate. In calculating the set-up labor, we use production run times for each product line times hours needed in each run, then divide it by the total production for the product. For the run labor, we simply use hours needed for each unit times the labor hour rate. And for the last part of the cost per unit, machine depreciation, we use machines usage for each product line times the machine depreciation rate, which is $25 per hour. At last, we add all the cost up to get the total cost per unit.

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